Mylan Faces U.S. Antitrust Investigation on EpiPenby , , and
Maker of EpiPen says it got FTC request in preliminary probe
Inquiry follows controversy over price hikes for allergy drug
Mylan NV set off a firestorm in Congress last year over skyrocketing prices of its EpiPen. Now it’s facing a U.S. antitrust investigation over whether it improperly thwarted competition to the blockbuster product.
The company has received a request for information from the Federal Trade Commission as part of a preliminary investigation, it said Monday in response to a query from Bloomberg. It said it hasn’t acted improperly to prevent generic competition.
The FTC is looking at whether Mylan’s practices violated antitrust laws, including whether small changes it made to the EpiPen effectively shielded it from competition from lower-priced products, according to a person familiar with the matter. Making minor changes to extend a patent, such as dosage levels, is known as product-hopping. Another area of scrutiny is whether Mylan entered any agreements that delayed cheaper versions of the EpiPen from coming to the market, said the person, who asked not to be named because the inquiry is confidential.
The FTC inquiry puts more pressure on Mylan, which is also caught up in a Justice Department criminal investigation into price-fixing by generic-drug companies. It’s not clear whether Mylan is a target of that investigation. The FTC probe into the EpiPen is in its early stages and may not result in an enforcement action, the person familiar with the matter said.
"Any suggestion that Mylan took any inappropriate or unlawful actions to prevent generic competition is without merit," Mylan said in an e-mailed statement. The FTC declined to comment.
Mylan dropped 0.93 percent to $36.32 at 3:49 p.m. in New York after falling as much as 3.2 percent.
The EpiPen is a self-administered injection of epinephrine, a drug that’s used to treat life-threatening allergic reactions from bee stings, food allergies or other triggers. Since acquiring the drug in 2007, Mylan has raised the price several times to more than $600 for a two-pack from about $57 a shot. It stopped selling single EpiPens in favor of twin-packs in recent years and has promoted the EpiPen by getting schools to stock it for emergencies.
Mylan said in its statement that the epinephrine auto-injector market is competitive, with multiple products competing on the market since it acquired EpiPen.
No Generic Substitute
While there are other injectable epinephrine allergy drugs available, there is no direct generic substitute for the EpiPen on the market.
The pen now includes a non-removable needle cap that prevents users from accidentally pricking themselves or others. That advancement and others were patented in the last eight years, and Mylan argues they’re critical to the pen’s safety and functionality. Mylan’s EpiPen patent is due to expire in 2025.
Mylan said Teva Pharmaceutical Industries Ltd. has had patent licenses to launch their proposed generic alternative to the EpiPen since June 2015, pending approval by the U.S. Food and Drug Administration.
Mylan urged the FDA to reject Teva’s generic version, which it did in February 2016. Mylan filed a petition with the agency noting Teva’s version had two caps and wasn’t truly equivalent. Mylan argued that because of the design difference of the caps, a patient in distress might not be able to quickly operate Teva’s version instead of the original.
Teva executives said on a earnings call in November that the company expects to get a generic version of EpiPen on the U.S. market in early 2018.
The FTC investigation follows a backlash from Congress over prices for the EpiPen. Senator Amy Klobuchar, a Minnesota Democrat, in August called for the FTC to investigate Mylan’s price hikes for EpiPen, asking the agency to look into whether the company used incentives or exclusionary contracts with insurers, distributors or pharmacies to block competing products.
Tammy Duckworth, now a Democratic Senator from Illinois, wrote to the Justice Department last year when she was in the House of Representatives to express concern about Mylan’s EpiPen4Schools Program, which allows schools to receive four free auto-injectors and then buy more at a discount. That program may have suppressed competition by prohibiting schools from buying a competitor’s product for a specified time period, she wrote.
The school program also drew the attention of New York Attorney General Eric Schneiderman, who said in September Mylan may have added anticompetitive terms to sales contracts with schools.
President Donald Trump attacked drug makers earlier this month, saying he’d force the industry to bid for government contracts. “They’re getting away with murder,” Trump said at a press conference in New York Jan. 12.
The FTC has aggressively pursued drug companies over agreements that delay the market entry of generic drugs to allow branded drugs to continue to enjoy their monopolies.
In a letter to Klobuchar in November, then-FTC Chairwoman Edith Ramirez declined to confirm whether the agency was investigating Mylan. She noted that the potential for the "anticompetitive product design is particularly acute in the pharmaceutical industry."
Mylan Chief Executive Officer Heather Bresch told lawmakers in September that Mylan only takes home about $100 from each two-pack after rebates, fees and discounts. Bresch, who is the daughter of Senator Joe Manchin, a West Virginia Democrat, also said the drugmaker has improved access to the EpiPen for patients who were at risk of needlessly dying from allergic reactions.
In October, Mylan said it had agreed to pay $465 million to the U.S. over how it charged Medicaid for the EpiPen, though the settlement hasn’t been confirmed by the Justice Department. The U.S. Centers for Medicare and Medicaid Services, or CMS, said Mylan had misclassified the EpiPen under the Medicaid health program for the poor. EpiPen had been classified as a generic drug, while the government said it was a brand-name product and that Mylan should have given states and the U.S. bigger rebates.
Mylan is no stranger to FTC scrutiny. In 2000, it agreed to pay $100 million to settle the agency’s claims that it conspired with other companies to deny its competitors ingredients needed to make two anti-anxiety drugs so that it could raise prices for the medicines.